LIBRARY OF THE
UNIVERSITY OF ILLINOIS
IN MEMORY OF
STEWART S. HOWE
JOURNALISM CLASS OF 1928
STEWART S. HOWE FOUNDATION
Fifty Years of Banking in Chicago
History is the depository of great actions: the witness of
what is past, the example and instructor of the present,
and monitor of the future. CERVANTES.
Merchants' Loan and Trust Building in 1907
Northwest Corner of Adams and Clark Streets
Fifty Years of Banking
William Hudson Harper
Charles H. Ravell
The Merchants' Loan and
Preface . . . . i
The Bank's Administration and Departments 3
Origin and Early History of The Merchants'
Loan and Trust Company . . 29
The Bank after the Chicago Fire in 1871 43
Men and Acts of an Important Era, 1871-1907 57
Early Banking in Illinois . . 73
HE Merchants' Loan and Trust Company,
oldest existing bank in Chicago, offers this
book in the commemoration of its fiftieth an-
niversary and half-century of public service.
Herein is briefly told what has made this
institution a foremost bank today. Then is told the
story of its organization, in a period of financiering
eccentric and disastrous, by men whose character, acts
and resources peculiarly qualified them for their impor-
tant undertaking. Then are furnished from the records
of the bank (the same being continuous since the great
fire of 1871), certain data which they may read with
pride who remember the bank's distinguished dead,
prominent among the makers of this city and its trade.
Finally, this book offers a condensed narrative of
the evolution of Illinois banking.
While there is still room for improvement in bank-
ing and currency systems, the progress made in the
last fifty years will be apparent to the reader of this
The Merchants' Loan and Trust Company, having
attained a half-century of uninterrupted growth without
merger or consolidation with a single other banking
institution, presents to whom it may concern, with
gratitude for the past and hope for the future, this
brief story of its unique career.
In this history of the bank's progress, it has been
thought best to reverse the chronological order of
events. Age of itself does not signify progress, and
if The Merchants' Loan and Trust Company were not
today a thoroughly modern bank, there would be little
excuse for these pages. Believing, however, that it
fully meets the requirements of a sound banking insti-
tution, the early pages of this volume are devoted to
The Merchants' Loan and Trust Company of today.
The Bank's Administration and
The Bank's Administration and
HE Merchants' Loan and Trust Company
now operates six departments which charac-
terize the greater modern bank. As this
book is primarily a history, it seems proper,
even in a city distinguished for the sound-
ness and capacities of its banks, to emphasize those
qualities and facilities which have undeniably given this
institution its strength and usefulness.
The aggregate banking resources of The Merchants'
Loan and Trust Company approximate $57,000,000,
the same including $7,000,000 in capital, surplus and
profits, and $50,000,000 in deposits.
The business transactions of the bank as an organic
institution are not only in every particular understood
and administered by its officers, but by its directors
also. Once a week a standing committee of two
directors reviews every loan made by the bank, which
means, not only the loans of the previous week, but
all loans held at the date of meeting. Once a month
the full board of directors meets when one member of
the executive committee retires and another director is
appointed to his place. Thus the policies and acts of
the bank's administration are in constant review by
every guardian of its fortunes.
Once every three months a separate committee of
three directors is appointed, which makes a complete
examination of the assets of the bank, counting the
cash, verifying all the notes, examining collateral,
checking all investments, and making a full written
report to the board of directors. In addition to this,
this committee examines all the securities held by the
The board of directors as now constituted (May i,
1907) is as follows:
Cyrus H. McCormick,
Erskine M. Phelps,
Moses J. Wentworth,
Enos M. Barton,
Thies J. Lefens,
E. H. Gary,
Clarence A. Burley,
John S. Runnells,
E. D. Hulbert,
This bank receives no public moneys on deposit,
and will accept no deposit when it is required to give
bonds or special security of any kind. No depositor in
this bank is secured more than any other depositor.
The smallest depositor in the savings department, with
his credit of one dollar, has exactly the same security
as the depositor with millions to his credit.
The Merchants' Loan and Trust Company issues
certificates of deposit bearing from two per cent, to
three per cent, interest, according to the time left on
deposit and the amount deposited.
Loans are made upon approved collateral at current
rates of discount. Responsible borrowers and deposi-
tors are assured of the most liberal accommodations
consistent with sound banking.
'Deceased May llth. 1907. f g 1
The policy of The Merchants' Loan and Trust
Company, not to receive public money or deposits,
has relieved it of any obligations to state, county or
city officers. It has never stood sponsor for, or signed
the bond for any city or county official. Consequently
it has never been a political bank, nor has it had any
selfish interest in public affairs, but rather has it been
conducted through its half-century of service as a bank
of merchants and manufacturers, a bank of commerce
and industry, a bank for savings, a bank for a larger
and richer Chicago. Undeniably it has felt the storm
and stress of crises, and such periods as befell the bank-
ing world in 1873 and 1893, for instance, are at least
remembered; but in all temporary vicissitudes there
has been something in the men and acts of this bank
which has contributed to its endurance, its growth
and the continued extension of that coveted form of
general credit, to-wit: a good name. It has been for-
tunate in its securities, in its small percentage of losses,
and in its personal oversight by its directors. It has
been its administrative policy that dividends should
never be immoderate, and that a surplus should ever
It is impossible to reproduce the first statement of
condition of The Merchants' Loan and Trust Com-
pany, as those records were destroyed in the great
Chicago fire. The cashier's report made to the stock-
holders December 31, 1871, shortly after that event,
can be compared with interest to the following state-
ment published at the call of the auditor of the State
of Illinois, on May 21, 1907, almost at the completion
of one-half a century of successful banking. A future
historian can make his own comparison a half-century
Loans and Discounts $26,830,072.44
Bonds and Mortgages , 9,981,509.34
Due from Banks 13,521,287.45
Cash and Checks for Clearing House 6,829,345.14
Capital Stock $ 3,000,000.00
Surplus Fund 3,000,000.00
Undivided Profits 1,273,851.82
Reserved for Accrued Interest 31,436.45
This bank came to its task in a period of financial
folly and irresponsibility. Uniformity and stability
had not yet been impressed upon American banking
by a national banking law, and license for mad finan-
ciering had wrought a perilous insecurity in trade and
finance. Charlatanism juggled values, while standards
were missing. There was wanted a financial institu-
tion, founded upon sane principles, fortified with
abundant capital, and conducted by people of good
repute. In short, there was wanted a bank with a per-
sonality. At this juncture, in 1857, Chicago citizens
most competent to discharge what they undertook,
established The Merchants' Loan and Trust Company.
Its policy was to pacify and conserve rather than to
disturb and dissipate. Conservatism in banking is not
cowardice or hesitancy or indifference, but rather a firm
and courageous regard for probabilities.
This bank was founded in the era of "wild-catism"
and was a new idea in the time of the reign and fall of
banks of illusive issues. With the exception of one
departure from its practice as a defensive expedient,
the new bank uttered no circulation. It undertook no
responsibilities in which it might default, nor any
chances in financiering in defiance of common sense.
It was a real bank, with real capital, and plenty of it,
started by reputable and successful business men in the
trade center of the wonderful and growing West. In
the nature of its soul and structure it was at once
recognized as a friend to the permanent welfare of
Chicago. In its evolution it has sought to avoid
speculation, and by its banking policy to discourage
speculation by others, save in forms which must char-
acterize every human enterprise.
The last decade has been the era of great expansion
and growth. During this period the bond, trust,
savings, and farm loan departments have been created
in the order named.
The removal from the Portland Block to the bank's
present quarters in The Merchants' Loan and Trust
Building took place in June, 1900. Since that time
the growth of the business has required more space.
Today the bank occupies the entire banking floor of
the building, with large clerical quarters on the third
The Merchants' Loan and Trust Company has
never consolidated with, or absorbed the business of,
any bank. Its steady and substantial growth is shown
by decades as follows:
Tear Capital Surplus Deposits
1857 $ 500,000 * *
1867 1,000,000 * $ 1,723,000
1877 1,500,000 $ 100,000 2,321,000
1887 2,000,000 1,000,000 8,069,000
1897 2,000,000 1,554,077 18,445,000
i97 t3,ooo,ooo 4,273,851 49,857,000
*Records burned in Chicago Fire
tStatement May 21. 1907
When one of the closest overseers of this bank's
fortunes was asked by the writer of this history to
characterize in the broadest way the nature of the
service of the first half-century of The Merchants' Loan
and Trust Company, this well known citizen replied :
"I would say before all, that this bank's policy has
been marked by breadth of scope, integrity, fidelity
and straightforward dealing. If this bank needed a
monumental memorial I would have written upon it
such sentiments as these."
The Foreign Department.
THE foreign exchange department does every
sort of foreign banking. Its volume and
scope have increased commensurately with the
growth of the bank.
This department buys and sells bills of exchange,
transfers money by draft and cable, issues letters of
credit for use both abroad and at home, deals in foreign
coin and bank note, and grants commercial letters of
credit for importers to aid them in buying in foreign
countries where their standing and credit may be
The foreign exchange department is a valuable adjunct,
frequently aiding the bank in placing its available funds
to better advantage than can be done in America, and
enabling it to loan in whatever foreign market there
may be offered the best interest return. This depart-
ment also undertakes collections of estates in foreign
countries. Chicago has a large foreign-born popula-
tion to which this bank, in the collection of estates,
has proved of much service.
The foreign exchange department has the following
distinguished and trustworthy connections in the com-
mercial centers of Europe:
England London. Union of London and Smith's
Bank, Limited; Lloyd's Bank, Limited.
Scotland Edinburgh and branches. National Bank
of Scotland, Limited.
Ireland Dublin and Belfast. The Munster and
Leinster Bank, Limited; The Belfast Banking Com-
France Paris. Comptoir National d'Escompte de
Paris; Munroe and Company.
Germany Hamburg. Deutsche Bank; Dresdner
Holland Amsterdam. Amsterdamsche Bank.
Belgium Antwerp. Banque d'Anvers.
Switzerland Zurich. Banque Federale.
Austria Vienna. Anglo-Austrian Bank.
Italy Genoa. Banca Commerciale Italiana.
Denmark Copenhagen. Den Danske Land-
Norway Christiana. Centralbanken for Norge.
Sweden Stockholm. Aktiebolaget Stockholms
The foreign exchange department was organized in
1883 by J. G. Orchard, who was its manager until
1895. He was succeeded by P. C. Peterson, who
conducted it until 1906, and who was in turn succeeded
by H. G. P. Deans.
Elected Director 1884
CYRUS H. MCCORMICK
* Elected Director 1887
^Deceased May 11, 1907
Elected Director 1890
Elected Director 1890
Second Vice-President 1884
Elected Director 1890
Elected Director 1898
MOSES J. WENTWORTH
Second Vice-President 1895
Elected Director i
Elected Director 1898
Elected Director 1903
E. H. GARY
Elected Director 1904
TRIES J. LEFENS
Elected Director 1904
Elected Director 1904
CLARENCE A. BURLEY
Elected Director 1906
The Bond Department
THE bond department of this bank was estab-
lished in 1899. Previous to that time The
Merchants' Loan and Trust Company had
been a large buyer of bonds for its own
account and for its clients. The necessity for hand-
ling this branch of its business more intelligently led
to the organization of this department.
It has been the endeavor to conduct the bond
department in such a manner as to co-operate with,
and supplement, the other departments and the general
business of the bank, realizing that while a well con-
ducted bond business reflects credit upon an institution,
any serious mistake in handling securities would injure
not only the bond department but the entire bank.
The Merchants' Loan and Trust Company, has,
therefore, pursued its course along somewhat more
conservative lines than those adopted by bond dealers
generally, and a large portion of the bonds it has
handled have been listed railroad bonds or municipal
securities. The bank is ready, however, to investigate
entire bond issues of established corporations where
the character of the security is such as to make a
desirable issue. It has placed a number of such issues
with its clients, and they have uniformly proved to be
among the most satisfactory investments offered.
While this company does not guarantee bonds sold
by it, nor promise to re-purchase them, it has been,
nevertheless, its policy to make a market for its
securities; and there is no place where customers desir-
ing to re-sell their bonds have found fairer treatment.
In addition to bonds offered for sale this bank is a
large buyer of bonds, and the purchases for its own
investment and for the trust funds left in its charge,
amount to several million dollars annually. The
character of the bonds offered for sale is, as a general
rule, the same as those purchased for investment, and
in purchasing bonds of this institution the investor
should remember that he is not dealing with one whose
sole desire is to dispose of bonds already purchased,
but with a large and experienced investor.
This bank is of real service to any investor in con-
servative securities, whether this be a woman with $500
in savings, or an investing capitalist. Negotiations are
facilitated by personal interviews, and by circulars
describing bonds on hand which are issued from time
to time, and are mailed on request, or are sent regularly
under standing order.
John E. Blunt, Jr., has had the management of this
department of the bank since its organization eight
The Trust Department.
No department of this bank has more
completely justified the foresight of the insti-
tution's founders than has the trust depart-
ment. It has grown with the banking depart-
ment proper, receiving strength from the latter' s
increasing resources, and bringing to it patrons with
interests both great and small.
The business of the administration of trusts has
become a profession closely supervised by the State,
and more and more confided in by the general public.
It has been found that a corporation of great resources,
conducted by financiers and men of affairs of the
highest capacity and integrity, and held to its assumed
responsibilites by valuable pledges and the law of the
State, can perform for persons and corporations, seeking
administrators of trusts, an office which for economy
and efficiency exceeds anything which can possibly be
rendered by single individuals or firms whatever their
talents or virtues.
The range of service performed in the execution of
trusts by a trust company, is not only very broad but
of great value to society. This service is one of the
leading functions of The Merchants' Loan and Trust
Company. This bank, with its accounts frequently
examined by its own committees and by a representa-
tive of the auditor of the state, with security on deposit
with this same official, and by aid of the legal advice
of competent counsel, and under the eyes of courts,
has accepted in trust not only the largest estate up to
this time ever thus bestowed with a trust company,
namely that of the late Marshall Field, but smaller
trusts from the dependent and inexperienced.
It has executed testamentary trusts, whereby the
wishes of a testator have been in some instances, even
more than fulfilled for his survivors. In consultation
with this bank's officers and legal counsel, it has often
opened a wise plan for the disposition of an estate quite
unimagined by an applicant for its aid.
It has acted with profit to the parties concerned as
administrator in all of the various technical relations in
which this service is known to the law. It has been
the guardian of minor children, and conservator of the
estates of spendthrifts and incompetents, and in these
connections has not only faithfully but profitably to the
parties concerned, discharged the conserving functions
with which by law it has been endowed. It has served
as agent for the care and management of the real and
personal property of individuals; been created the cus-
todian of securities by absentees; has received proper-
ties in trust during the grantor's life, and efficiently
managed them; it has acted as stock transfer agent of
corporations, as registrar of stock, as trustee and mort-
gagee under trust deeds or mortgages securing issues
of bonds; as assignee and receiver, and as depositary in
the reorganization of legitimate corporate enterprises,
but without engaging in promotions. Leon L. Loehr
has been the manager of this department since its
creation in 1900.
The Savings Department.
A NATURAL part of such an institution as The
Merchants' Loan and Trust Company is a
savings department. This bank was author-
ized by the legislature of Illinois, in an act
incorporating the bank in 1857, to conduct a savings
business, and provision was made therefor in the
original name of this company, which was formerly
the Merchants' Savings, Loan and Trust Company.
Circumstances at that time did not justify the creation
of this department in the bank's early years, and
eventually the corporate name was changed to its
present form in conformity with fact, but in 1902
the board of directors considered that the time was
ripe for the establishment of a savings department.
This department was opened on February 24, 1902.
At once the public recognized that such a bank was
peculiarly equipped to receive and care for savings.
It had conservative management, great resources,
experience and a reputation in Chicago's banking world
which was unique. The patronage of this department
began instantly, and in ten months' time, at the close
of the year, the saving deposits amounted to $ 1,979,000.
In 1906 it was necessary to remove the savings
department to the large quarters opposite and across
the hall, which were vacated for this purpose by the
Chicago Clearing House. The savings department
has now ample facilities to handle the banking business
of depositors promptly and to their entire satisfaction.
Believing banking by mail to be of advantage to
the bank properly conducting it, and to numberless
people seeking strongholds of deposit, the savings
department has added facilities for the practice of this
form of public thrift.
The Farm Loan Department.
THIS bank offers its services to investors with
the guarantee that every farm mortgage it
offers for sale has its stamp of approval, its
judgment being backed by the investment of
its own funds.
The basis of life and the Nation's wealth are the
farm and its products. Already the American farmer
receives more than $6,000,000,000 yearly from what
he produces from the soil. The great corn belt in
particular surpasses all in fruitfulness and reliability.
These sovereigns of the corn belt, Illinois, Iowa and
the southern counties of Minnesota, are conceded to be
the safest farm loan sections of the United States.
The farm lands of these states are estimated to be
worth more than $4, 500,000,000, or about one-third
of the value of all the farm lands of the twelve great
central agricultural states.
When a farmer borrows money to develop proper-
ties in this particular territory, he borrows to make a
good thing better. He does this by diversified and
intensive farming, helped by those economic and social
facilities of magical potency, good roads, rural mail
delivery, the telephone, the trolley and the automobile,
and by those older and standard auxiliaries, railways and
waterways. A thrifty farmer borrows as a thrifty mer-
chant borrows. He means to protect and enrich his
Each would sometimes over-borrow, but neither is
permitted to do so when the lender is wise. Fully
ninety per cent of the loans placed in the corn belt are
secured by mortgages incurred for the development
of property unerringly certain to recoup the owner
manifold. No class of security is less subject to way-
ward assault upon its stability than the farm mortgage.
None is less affected by hard times. None can be
more confidently bought and forgotten than one which
is the pledge of an intelligent farmer of the richer states
of the corn belt. More than one-half of the assets of
a great eastern insurance company are loaned upon
mortgages secured almost entirely by farm properties.
But to make security doubly secure an agent, such as
The Merchants' Loan and Trust Company is, makes
a farm loan with provisions of safety for the borrower
more than ordinary. It is the method of making the
loan that constitutes the difference between a good and
a poor farm mortgage. Investors buying through
The Merchants' Loan and Trust Company get the
benefit of fifty years' experience in making investments;
the methods are the most exacting, every precaution
to protect the investor being taken.
Applications for loans come, in the first instance,
to a well known and responsible banker in the vicinity
of the farm on which a loan is desired. The farmer
makes a sworn statement of the cost and condition of
his farm, and the banker makes a full written state-
ment of the condition and value of the land, based
invariably upon personal inspection. These papers
are passed upon by experts in the bank, thoroughly
versed in land values, and, if the statements are
satisfactory and the amount asked for is fifty per cent.,
or less, of the cash value of the land, exclusive of
buildings, the abstracts are referred to the bank's
attorneys for the examination of title. This part of
the work is vital, and is done with the utmost care
and thoroughness; no loan is passed until every
essential legal point is covered and the borrower's title
found to be perfect.
The traveling examiner of this bank (who up to
this time has had nothing to do with the transaction),
then proceeds to make a final personal inspection of
the land, also a complete, independent, written report,
covering every detail. If this report verifies the
statements of both farmer and the local banker, the
loan is accepted.
The farm loans placed by The Merchants' Loan and
Trust Company are sold on a basis to net the investor
four and a half per cent., and the purchaser is given
ninety days in which to investigate the security. The
bank rendering every aid in making such investigation.
Since the organization of this department of the
bank in 1905, it has been under the management of
Frederick W. Thompson.
Safe Deposit Vaults.
WHILE the Merchants' Loan and Trust Safe
Deposit Company is a separate corporation,
it is practically a department of the bank.
The officers of the bank are the directors of
the safe deposit company, and its business affairs are
closely allied with The Merchants' Loan and Trust
Company. This branch of banking has had a remark-
able growth in Chicago. The deposit vaults of the
banks and trust companies of Chicago harbor posses-
sions of great variety and of incalculable value.
No structure more completely declares its capacity
to fulfill its purposes than a safe deposit vault. All its
substance is enduring. Through and through it is an
absolute and inspiring citadel of strength. Modern
and similarly constructed vaults were not damaged in
the slightest by the great Baltimore fire in 1904, or the
San Francisco fire and earthquake in 1906.
The vaults of the Merchants' Loan and Trust Safe
Deposit Company are spacious and impregnable. They
are surrounded by many private rooms necessary to
the constant visitors to such a utility. The boxes of
these vaults are of various sizes, one size sufficient for
the precious will and other papers of the man of no
great means, while other sizes store the valuable papers
of large corporations and estates. Today no article of
value not in constant use, and which can be stored in
a safe deposit vault, should be carelessly kept in houses,
hotels and business offices. There is also a large care-
fully arranged vault for the safe keeping of trunks,
silverware and other bulky packages. Packages are
received and safety is guaranteed to the extent of the
value placed thereon. Private safes can be rented by
the year at prices varying with size and purpose.
These vaults are conveniently accessible from the
banking rooms and from the main entrance lobby
of the building, and are under the management of
Alfred L. Goldsmith.
The Executive Administration.
THE executive administration of this bank is
today conducted by six general officers giving
their entire services to its affairs. No officer
is identified with other business enterprises.
The presidents of The Merchants' Loan and Trust
Company and their terms of office have been as follows:
J. H. Dunham, from the time of the incorporation
of the bank, in 1857, until the spring of 1862; Henry
Farnam, from spring of 1862 to 1863; Solomon A.
Smith, from 1863 until the time of his death, in 1879;
John Tyrrell acted as president after the death of
Solomon A. Smith until his regular election as presi-
dent, in 1 8 8 1 , and then served in that office until 1 8 84.
J. W. Doane was president from 1884 to 1898 and
Orson Smith, the present incumbent, has served since
The vice-presidents have served as follows:
John High, Jr., from June, 1857, until the fall of
the same year (Walter Newberry acting as vice-presi-
dent to fill out Mr. High's unexpired term from the
fall of 1857 into the year 1858); Jonathan Burr, from
1858 until the spring of 1860; H. H. Magie from the
spring of 1860 until the spring of 1862; Solomon A.
Smith, from the spring of 1862 to the spring of 1863;
W. E. Doggett, from 1863 until 1877; John Tyrrell,
from 1877 un til 1881; Byron L. Smith, from 1881
until 1885; P. L. Yoe, from 1885 until 1892; Orson
Smith second vice-president in 1884, vice-president
from 1894 until 1898; E. D. Hulbert, second vice-
president in 1895, an d vice-president since i!
The cashiers and their service have been as follows:
A. J. Hammond, from the opening of the bank
until November, 1857; M. B. Bartlett, from Novem-
ber, 1857, until June, 1858; D. R. Holt, from June,
1858, until 1862; Lyman J. Gage, from 1862 until
1868; Charles Henrotin, from 1868 until 1878;
H. E. Lowe, from 1878 until 1884; F. C. Osborn,
from 1884 until 1895; J. G. Orchard, the present
cashier, since 1895.
Henry E. Lowe was assistant cashier from 1871 to
1878, F. C. Osborn succeeding him and occupying
that position until 1 8 84.
F. N. Wilder became assistant cashier in 1891,
having served in other capacities with this bank since
1 877. Frank G. Nelson has served as assistant cashier
since 1900. P. C. Peterson became assistant cashier
in 1902, having served in various other capacities since
The fiftieth anniversary of this bank is a suitable
occasion to acknowledge the long and valuable services
of a number of the "old employes," who have carried
on the detail work of the bank in a most creditable
manner and with a record of twenty years or more of
honorable service. In this roll are
John M. Oosterbeck,
William Dent Beall,
Isaac H. Pervier,
Robert N. Ward,
William B. Hall,
John O. Barber,
William J. Quetsch,
Robert T. Durrell,
Charles L. Gary,
*Isaac W. Brown,
* Deceased April 6. 1907. 
Present Location and the Changes
Made in the Past.
THE location of The Merchants' Loan and Trust
Company has been changed from time to time
to conform to the business center of the city.
The bank's first location was at the northwest
corner of South Water and La Salle Streets, under the
Board of Trade rooms. It continued in business there
until the spring of 1 860, when it removed to the Dickey
Building, at the southwest corner of Lake and Dear-
born Streets, where it remained until the fire of October
9, 1871. Immediately after the fire temporary quarters
were occupied in Solomon A. Smith's house, on Wabash
Avenue below Harrison Street. Here the bank
remained until the completion of the Manierre Building,
at the northeast corner of Madison and Dearborn
Streets, into which it removed in the spring of 1872.
Requiring larger quarters, it moved, in 1881, to the
Portland Block, at the southwest corner of Washington
and Dearborn Streets, where it remained until 1900,
when it removed into its present location, the Mer-
chants' Loan and Trust Building, on the northwest
corner of Adams and Clark Streets.
Several illustrations throughout this volume will
give the reader a clearer and more comprehensive idea
of these changes, which in a general way indicate quite
accurately the shifting of the financial centers of Chicago
during fifty years.
F. N. WILDER
F. G. NELSON
Manager Bond Department
JOHN E. BLUNT JR.
Manager Trust Department
Manager Farm Loan Department
Manager Foreign Department
Manager Merchants' Loan and Trust
Safe Deposit Company
ALFRED L. GOLDSMITH
Origin and Early History of The
Merchants' Loan and Trust Company
Origin and Early History of The
Merchants' Loan and Trust Company
HE written history of this bank may be divided
into three parts. The first is the story of
its origin, the second its spirit and conduct
in the Chicago fire of 1871, and the third its
administration and development from the
period of the great fire until its fiftieth anniversary in
1907. The bank's historical data rescued from fire
ruins are of course meager, and so the sources of infor-
mation about its early history lack a vividness and
detail which the chronicler of a later generation can not
The creation of The Merchants' Loan and Trust
Company was the protest of Chicago's soundest busi-
ness men and financiers against the continuance of irre-
sponsible and unscientific banking, and alike in behalf
of merchant and laborer. To chronicle the creators of
this bank is to list not a few of the builders of Chicago.
It was in 1856 that among other prominent citizens the
following came together to establish an institution that
should subserve the mercantile and manufacturing
interests of the Chicago of that day, and of the future
Chicago which some foresaw:
Walter Loomis Newberry,
John High Dunham,
Dr. John H. Foster,
Isaac Newton Arnold,
Mahlon Dickerson Ogden,
F. B. Cooley,
William E. Doggett,
John High, Jr.,
Haines H. Magie,
William B. Ogden,
Augustus Harris Burley,
De Villo R. Holt,
Edward Kendall Rogers,
Cyrus Hall McCormick,
Solomon A. Smith.
Isaac Newton Arnold, the first clerk of the city of
Chicago, was one of this bank's first trustees. In an
era of expansion and repudiation, "he was known as an
earnest pleader for saving the credit of Illinois by
accepting in good faith, the whole burden which had
been so unwisely laid upon it by the state representa-
tives. Thenceforth he was universally regarded as a
champion of public honor, a principled opponent of
repudiation." He was several times in the state legis-
lature, being elected in 1856 on the anti-slavery ticket.
He served in Congress throughout the great Civil War.
He introduced the momentous bill in Congress, pro-
hibiting slavery in every place directly subject to
national jurisdiction, and with amendments it was
enacted and became a part of the constitution of the
United States. He was the biographer and friend of
Abraham Lincoln whom he had truly known and
supported in his public career. While an attorney and
a man of letters generally, he was one of Chicago's
Grant Goodrich was a prominent attorney, associated
not only in the founding of this bank, but of North-
western University. He was a judge of the Superior
Court of Chicago.
Mahlon D. Ogden was the brother of William B.
Ogden. He was a lawyer, probate judge and business
man, and one of this bank's first trustees. His was the
sole house on the north side escaping the great fire.
It was long an historic mansion. Its site is now
covered by the Newberry Library.
Dr. John H. Foster was a surgeon in the Blackhawk
war, and a particularly efficient friend to the cause of
education, both in the city and state. He was a mem-
ber of the first board of trustees and rated as one of
the wealthiest citizens of Chicago.
The name of Luther Haven is preserved in the
record of his services in development of the public
school system of Chicago. He was president of the
board of education and collector of the port under
Presidents Lincoln and Johnson.
John Wentworth was a New Hampshire man and
graduate of Dartmouth College. Starting to Chicago
in 1836, he completed the journey on foot from
Michigan City. Soon after he became proprietor of
Chicago's first newspaper, the Chicago Democrat, which
he conducted until 1861. He was in Congress ten
years, and was twice elected as mayor of Chicago. In
the panic of 1857, he stood for specie redemption.
With these many activities he was also an attorney, a
student of finance, and a director in Chicago's first
railroad, the Galena and Chicago Union.
William B. Ogden came to Chicago in 1835, exten-
sively embarked in real estate, and became Chicago's
first mayor. He stood for public credit in a precarious
time, and in a large sense was a builder of Chicago and
the northwest, putting energy and money into railroad
development. When fire levelled Chicago, he was
then residing east, but returned to the city of his
greatest activities, and exhorted its people to believe in
its future and to build afresh. He was one of the
founders and a trustee of this bank in 1857.
Walter L. Newberry came to Chicago from Con-
necticut in 1833, entering business as a dealer in gen-
eral merchandise. He was one of the founders of The
Merchants' Loan and Trust Company, and for a long
time was a trustee. He was also a director and
president of the old Galena railroad, now a part of
the Northwestern system. For six years he was presi-
dent of the Chicago Historical Society. In 1841 he
was active in founding the Young Men's Library
Association of Chicago, making the first contribution
of books to it. His monument in Chicago is the
great Newberry Library.
Francis B. Cooley was a merchant and head of
the foremost dry goods house of its day, known as
Cooley, Farwell & Co. He was one of the organizers
of this bank and a trustee in 1857.
Charles Hitchcock was a distinguished lawyer of
Chicago. He was the president of the constitutional
convention held in Springfield in 1869 and 1870. He
framed the present constitution of the State of Illinois.
He was one of the organizers and incorporators of this
John H. Dunham was one of the foremost mer-
chants of this city, prominent at the time because of
the interest he took in the city's early improvements.
His activities resulted in the building of Chicago's
present waterworks system. He was the unrelentless
leader in the fight directed toward the expulsion of
foreign and local irredeemable paper currency then
flooding the channels of trade. He was the first presi-
dent of this bank, from 1857 until 1862.
George Steele was a contractor and constructed a
portion of the Illinois and Michigan Canal. He built
the first steam elevator in Chicago to receive grain from
the canal and railroads at the junction of North Frank-
lin street and the river. He afterwards engaged in the
produce and commission business and was president of
the Chicago Board of Trade in 1852 and 1853. He was
one of the founders and a trustee of this bank in 1857.
Jonathan Burr was one of Chicago's most progress-
ive men and one of its earliest philanthropists, leaving,
as he did, his handsome fortune to public charities.
He was a trustee in 1857, and vice-president from 1858
Haines H. Magie came to Chicago in 1832. He
was in the mercantile business which he pursued until
about 1 8 54, by which time he acquired an ample for-
tune. His mercantile business bore the same relation
to Chicago then as that of Marshall Field and Com-
pany does today. He was vice-president of this bank
from 1860 to 1862. He died in 1879.
William E. Doggett was a wholesale merchant.
Doggett, Bassett & Hill were the leading shoe dealers
in Chicago, being founded in 1846. He helped
organize, in 1860, the Mercantile Association which
did so much for the city's business interests in Chi-
cago's early days. He was a trustee of this bank in
1857 and, after retiring from business, served as vice-
president from 1863 to J 876.
Augustus H. Burley was a prominent merchant of
early Chicago, conspicuously identified with its affairs.
At the outbreak of the civil war he was active in organ-
izing the Union Defense Committee. He was one of
the organizers of this bank and a trustee in 1857; he
continued to serve as a director until the time of his
death in 1903.
De Villo R. Holt as a young man had charge of
his father's trading post at Mackinac Island. In 1847
he came to Chicago and formed the firm of Foster &
Holt, which was incorporated in 1888 as the Holt
Lumber Company and is still extensively engaged in
the lumber manufacturing business. He was one of
the organizers of this bank and a trustee in 1857; he
served as cashier from 1858 to 1862, when he resigned
on account of his health and recommended as his suc-
cessor Lyman J. Gage, who was then a bookkeeper in
Amzi Benedict was a dry goods merchant, who
shared in the establishment of the firm of Field &
Benedict, about 1849, The house weathered the finan-
cial storms of 1857 and 1861, and became recognized
throughout the west as one of Chicago's strongest and
most honorable houses.
John High, Jr., about 1837 founded the dry goods
house of Magie & High, and was one of the promi-
nent merchants of the Northwest. He was one of
the founders and first vice-president of The Mer-
Location of Bank when Established in 1857
Northwest Corner South Water and La Salle Streets
First Board of Trustees in 1857
ISAAC N. ARNOLD
WALTER L. NEWBERRY
First Board of Trustees in 1857
WILLIAM B. OGDEN
JOHN H. DUNHAM
DR. JOHN H. FOSTER
First Board of Trustees in 1857
WILLIAM E. DOGGETT
FRANCIS B. COOLEY
The Dickey Building in 1871
Southwest Corner Lake and Dearborn Streets
chants' Loan and Trust Company. He died in 1857.
Solomon A. Smith came to Chicago from Massa-
chusetts in 1840, and at first became connected with
Luther and Mathew Laflin, the country's largest
makers of powder. He, succeeding John High
Dunham in this bank's presidency in 1860, so con-
ducted its affairs during a perilous time, that the city's
leading historian has written of this financier: "As a
banker and financier Mr. Smith was rated as one of
the strongest of the strong, and to him is due the
greater honor of upholding the commercial credit of
our city, than to almost any other one man."
Henry Farnam was from Connecticut, and one of
the first board of directors of this bank, and its president
from 1862 to 1863. He was the contractor for the
building of the Chicago & Northwestern Railway and
one of its presidents.
Reputable sponsors stood for this bank at its legis-
lative birth. In the senate the necessary bill was
introduced by Norman B. Judd, more eminent still in
later life as United States minister to Russia, by
appointment of Abraham Lincoln. In the house
Isaac N. Arnold also championed, together with Mr.
Dunham and others, the measure which was to prove
of no little significance to the welfare of a great city
which was to be. On January 27, 1857, the bill came
out of the legislature, to be duly approved on the fol-
lowing day, January 28th, by Governor William H.
Bissell; in the house of fifty-nine members voting, two
only opposed the measure.
This bank was incorporated as the Merchants'
Savings, Loan and Trust Company, and its incorporators
were: William B. Ogden, F. B. Cooley, N. P. Wilder,
Henry Farnam, Samuel P. Officer, John High, Jr.,
Erastus S. Williams, Henry W. Hinsdale, John W.
Stanley, John P. Babcock, Charles Hitchcock, D. R.
Holt, R. W. Officer, and associates. The capital of
the company was fixed at $ 500,000, with liberty to
increase the same to $2,000,000. The life of the cor-
poration was fixed for a term of fifty years next suc-
ceeding the first day of March, 1857. A grace of two
years was also allowed in case the corporation, at the
close of its operating period, should be in the process
of closing up its affairs. The charter further provided
that the management of the company should be by a
board of trustees of at least nine in number, and that
the stockholders in the corporation should be holden
to the creditors for the amount of capital stock each
held in the same.
Empowered to begin business, the bank's organizers
reached forth for a banking place and banking talent.
Their progress is shown in the following news item
published in the Chicago Daily Democrat, of May 5,
"A NEW BANKING INSTITUTION.
"The stock necessary for the organization of the
Merchants' Savings, Loan and Trust Company has all
been subscribed. The directors have chosen J. H.
Dunham, president, and A. G. Hammond, late of the
Hartford Connecticut Bank, cashier, and propose
opening the institution for business between the ist
and 1 5th of June, in Geo. Steele's building, South Water
Street. The capital of the institition is $500,000 with
the liberty to increase the same to $2,000,000.
"The trustees of the company are:
"W. B. Ogden,
"W. L. Newberry,
"John High, Jr.,
" Henry Farnam,
"John H. Foster,
"Isaac N. Arnold,
"D. R. Holt,
"Wm. E. Doggett,
"F. B. Cooley,
"A. H. Burley,
"J. H. Dunham."
A month later on June 3rd, the same paper repeat-
ing its announcement of Mr. Hammond's engagement,
thus advised the public to look upon the new bank
"THE NEW BANKING INSTITUTION.
"We learn that A. G. Hammond, Esq., cashier of
the Hartford Bank, Hartford, Connecticut, retires from
his position in that institution, to take the direction of
the large joint stock bank of this city, for which a char-
ter was obtained at the last session of the legislature.
The institution is commonly known as Dunham's
Bank. Some of our leading business men and heaviest
capitalists are stockholders in this bank." (List of
stockholders not quoted.)
The Merchants' Savings, Loan and Trust Company
bank opened for business on Wednesday, June 10,
1 857, an event which received the following notice in the
Chicago Daily Democrat, of June 12:
"MERCHANTS' SAVINGS, LOAN AND TRUST COMPANY.
"This banking institution, of which A. G. Ham-
mond, Esq., is cashier and secretary, Hon. J. H.
Dunham, president, and John High, Jr. Esq., vice-
president, commenced business on Wednesday last.
The institution was chartered by the last legislature.
The capital is $500,000, with the privilege to increase
it to $2,000,000. Of this capital $150,000 has been
paid up already, which will be increased at the rate of
$100,000 per month, until the $500,000 is paid.
"This institution has started under very flattering
auspices, a large number of our wealthiest business
men having taken stock. A large number of accounts
have already been received, and in a few weeks at most,
the bank will be in the full tide of successful operation
and become one of the leading institutions of the city.
The cashier, A. G. Hammond, is late of the Bank of
Hartford, and it will be a good recommendation to our
citizens generally to say, that he is a brother of C. G.
Hammond, Esq., superintendent of the Chicago, Bur-
lington and Quincy Railroad, and if his looks do not
belie him, he will prove himself every way worthy of
the relationship. The president and vice-president are
well known as among our most wealthy and conserva-
tive business men, who will take all possible care of the
character and credit of the institution.
" The establishment of the new bank created quite a
little excitement among the bankers generally yester-
day, and some pretty heavy drafts were made upon
some of the larger and older banks to meet the require-
ments of the new.
"We understand that over $250,000 of the capital
stock has been taken abroad, which will, of course, add
so much to the available bank capital of the city."
Under such encouraging auspices as are above
described the new bank began business, and, in an
advertisement in the Chicago Daily Journal, of June
1 3th, thus solicited patronage:
"Merchants' Savings, Loan and Trust Company,
having a subscribed capital of $500,000, with the
privilege to increase the same to $2,000,000, with
$100,000 in cash fully paid in, is, according to the
provisions of its charter, prepared to buy and sell
exchange on all the principal cities of the United
States, and discount satisfactory business paper of
short date. The executive committee will meet daily
at twelve o'clock a.m., and persons applying for
discounts will receive an answer at one o'clock p.m.
"They will receive money for accumulation, allow-
ing compound interest at seven per cent, per annum,
when the amount is deposited for a number of years;
receive and execute trusts by order of courts from
estates, corporations and individuals, and also collect
notes, drafts and acceptances payable in this city, and
remit for same at current rate of exchange at maturity,
and also make collections upon their points upon
"Office corner of La Salle and South Water streets."
Only once, so far as its knowledge and intentions
go, has this bank been a disturber rather than a con-
server. The event is noted in a money market
bulletin of a Chicago paper, date of June 20, 1857:
"The new bank just started in this city (Merchants'
Savings, Loan and Trust Company), slightly disturbed
the regular course of business on Wednesday, as its
entire paid up capital, and a considerable amount in
deposits, were drawn from the currency in general
circulation and from the other banks, but, in a day or
two, as these funds were re-discounted, this disturbing
element regulated itself."
Edwin S. Wells, a resident of Lake Forest, Illinois,
was the first depositor in this bank. He opened
number one account early on the morning of June 10,
i857> an d since has maintained these business relations
during half a century. In 1857 he was engaged
in the wholesale grocery business on South Water
Street, the firm name being Wells & Faulkner. Mr.
Wells is now seventy-eight years of age and has retired
from active business.
The Bank After the Chicago Fire in
The Bank After the Chicago Fire in
HE records of the transactions of corporate
bodies are as unimpassioned as the brick
books of Babylon, although between the
lines are to be read the story of struggle,
sometimes of a progressive success, some-
times of cumulative disaster. The written history of
The Merchants' Loan and Trust Company is happily
devoid of sensations. It has metall perils incident to the
business of banking with composure, and all crises with
forethought and confidence disasters it has had none
save that of the great fire of 1871, common to the
whole community. When the financial storms of 1 873
and 1893 were engulfing hundreds of banks, the ani-
mating policies of its administration easily enabled it
to move on without halting or hesitation, and, be it
gratefully recorded, reinvigorated and with the increased
confidence of Chicago's business world.
One may not, however briefly, treat of the evolution
of The Merchants' Loan and Trust Company without
a searching glance at the volumes which so passively
record the proceedings, month after month, year after
year of the administrators of its work of its board of
trustees drawn from Chicago's most representative and
most successful business men, men of wisdom, conser-
vatism, courage, and large affairs. These volumes are
the minute books of the acts of directors who have
truly directed Chicago's oldest bank. From these
records are herewith gleaned data which older Chicago
citizens, with live, even affectionate memories, of con-
temporaries who have guided the growth of this bank,
can read with more than passing interest.
The Merchants' Loan and Trust Company arose
from its ashes after the great fire of 1871 in a manner
most interestingly pictured to those who will read
between the lines of the formal records which testify
to the corporate acts necessary to a new start and
continuation of business. A week after the fire, when
resolve had become energized by the heat with which
the bank's ruined pile had parted, there was held a meet-
ing having the following official record.
"Chicago, October 17, 1871.
"A meeting of the Board of Trustees of The Mer-
chants' Savings Loan and Trust Company was held at
the residence of S. A. Smith, Esq.
" There were present Messrs. Smith, Armour, Yoe,
Tyrrell, Foster and Kellogg.
" On motion of P. L. Yoe it was unanimously
resolved that this Company open for general business
" On motion of John Tyrrell it was resolved that,
in consequence of the loss of many books and papers of
the Company, the president and cashier be authorized
to use their judgment in the payment of balances by
" On motion of P. L. Yoe it was resolved that
Messrs. Ayer & Kales be employed as the attorneys
of this Company.
" On motion the Board adjourned.
"CHARLES P. KELLOGG, Secretary."
The next step was thus recorded by the men who
"Chicago, October 20, 1871.
"A meeting of the Board of Trustees of The Mer-
chants' Savings Loan and Trust Company, held at
their office in the residence of S. A. Smith, Esq., at
ten o'clock a. m.
" Present : S. A. Smith, Armour, Foster, Yoe, Kel-
logg and Tyrrell.
" On motion of P. L. Yoe, seconded by J. Tyrrell,
it was unanimously resolved that the cashier and proper
officers of this Company be, and they are hereby,
instructed on being satisfied of the accuracy and justice
of any claim or claims for balances on account of
deposits at the time of the late fire, to enter up credit
therefor to the person, persons, firm or company
entitled to the same.
" On motion of C. P. Kellogg, seconded by George
Armour, it was resolved that the president, for this
Company, unite with the Chicago Gas Light and Coke
Company in the construction of a building on the cor-
ner of Wabash Avenue and Hubbard Court, a portion
of which shall be used as a temporary banking house
for this Company.
"JoHN TYRRELL, Secretary pro fern."
Then came for judicious settlement an extraordi-
At the regular monthly meeting of the trustees,
December 4, 1871, there being present Sol. A. Smith,
Wm. E. Doggett, E. K. Rogers, H. H. Magie, John
Tyrrell and John H. Foster, the cashier reported
<c that most of the accounts of depositors had been
settled and restored upon the books, but that there
still remained unsettled a number of accounts of depos-
itors, the amount of whose claims was some $2 10,000;
and that, if all these claims were settled and paid, the
whole amount of deposits allowed would overrun the
amount of deposits supposed to be held by us at the
time of the fire some $58,500.
"On motion of Wm. E. Doggett it was unani-
mously resolved that, the board of Trustees having
heard the report of the cashier as to the condition of
the old deposit accounts, hereby desire to express their
approval of the settlements already made, and at the
same time record their opinion that it is to the interest
of the institution that the claims remaining unadjusted
be settled at the soonest possible day in such a manner
as may be deemed best by the president and cashier,
believing it better for the institution to suffer the loss
estimated by the cashier (some $58,500) rather than
be subject to any litigation in court."
Pursuant to this resolution it was only a matter of a
short time, before each and every claim had been satis-
factorily adjusted and settled for all time to come.
The history of American banking does not record
another such example of mutual confidence and busi-
ness honor. Depositors, without even a scrap of
paper to prove their claims, were restored to a financial
position, enabling them to resume business.
In the foregoing way The Merchants' Loan and
Trust Company settled its uninterrupted business har-
moniously and efficiently after the great fire. When the
eventful and destructive year of 1 871 had run its course,
the cashier of the bank, made a report to its stock-
holders which amounts to a more than ordinarily
interesting page in the history of Chicago banking.
In the main this report reads as follows :
Opening the Vaults of this bank after the Fire
From a sketch made by Henry Reinhardt in 1871
Temporary Banking Quarters after the Chicago Fire
Residence of Solomon A. Smith, Wabash Avenue, in 1871
The Manierre Building in 1872
Northeast Corner of Madison and Dearborn Streets
"Gentlemen, I beg to submit to you the usual
statement of the condition of the affairs of your insti-
tution on the evening of December 3Oth, 1871, being
the closing of our fiscal year, viz.:
STATEMENT TO THE STOCKHOLDERS OF THE
MERCHANTS' SAVINGS LOAN AND TRUST COMPANY
Capital Stock ........ $ i ,000,000.00
Due Depositors ...... 2,017,033.27
" Banks and bankers 102,025.98
" Unpaid dividends 5,454.23
" Undivided earnings 535>57!'78
" Surplus account . . 50,000.00
Bills discounted ...... $1,817,459.09
Overdrafts and call loans 108,152.10
United States 5/ 20 bonds 120,500.00
Chicago water loan 7%
bonds ............ 100,000.00
Office furniture ...... 2,000.00
Due by banks and bank-
ers exchange .... 668,310.17
Cash remittances .... 24,368.81
Cash on hand in currency 733,8 1 8.93
Cash on hand in checks 135,476.17
"The foregoing is a correct statement of the assets
and liabilities of your institution, except as to the item
'due depositors.' When the remaining outstanding
accounts and claims of a few depositors are adjusted,
(the delay in the settlement of this having only been
occasioned either by the absence of the parties or the
research for further proofs to substantiate the claims),
this item will be increased by some $55,000, and this
increase will have to be offset by a corresponding
charge to profit and loss.
"To better explain this discrepancy, it may be well
to record here the trying and vexatious crisis through
which your institution has had to pass in the last
"As the great fire of October 8th was fast assuming
a most alarming character, it found your president,
Solomon A. Smith, Esq., and Mr. Lathrop, one of the
book-keepers, promptly on hand at the office of the
bank. The books of the institution were immediately
placed in the book vaults and all were carefully closed.
A few moments afterwards your cashier made his
appearance, and a hasty consultation was held with the
president as to what was deemed most advisable to do.
"The danger to the institution was fully compre-
hended at once, and no time was to be lost. It was
well remembered that but a few years before our vaults
were, at considerable expense, put in what was then
believed to be the best of condition, and were then
inspected and pronounced fire-proof by our architect.
Our money and book vaults were consequently con-
sidered equally safe, but, as a measure of greater
prudence, it was resolved to direct at once all our
efforts towards placing our money and other valuables
beyond the reach of the destroying element.
"The doors of the bank were closed behind us
while the combinations and doors of our money vaults
were open. The money, checks and bills discounted,
with collaterals, were taken from our safe and, bur-
dened with this precious load, not in the least intimi-
dated by the danger of being robbed by the mobs
of the streets, all three started for a place of safety,
after carefully closing all vault doors. Through
streets filled with dense smoke and burning cinders, or
obstructed by crowds of half demoralized people, your
valuables were carried from station to station until
they reached a place deemed sufficiently secure, some
two miles from the starting point.
"In the meantime another journey was made by the
cashier and book-keeper to the bank, but the fire was
then so close upon it that only a list of the numbers
of our Government bonds and various balance sheets
of general accounts could be carried off in hot haste.
"On the following Tuesday morning, at the earliest
possible time, the remains of the banking building
were reached and work began at once to cool off our
vaults, which were surrounded by fire. After three
days, during which constant work and guard were
kept upon the vaults, they were finally entered and
the contents of the money vault were removed.
" But, if we were so very fortunate in saving all our
valuables, we were not so successful with our books.
One of the large book vaults had given way to the
heat and pressure of falling walls, and, to our utter
consternation, we found many of our books, accounts
and papers, to be burned and charred beyond any
"This seemed to us then an almost irreparable
calamity some six hundred accounts involving a sum
of some two million of dollars, subject to call at a time
when the public mind was disturbed and confidence
seemed destroyed, to be still without a scrap of paper
to indicate their condition. This surely was anything
"However, on the morning of October 17, 1871,
the first day any other bank reopened, your trustees
convened and wisely resolved that the bank should
open for business as usual that very morning, leaving
to the president and cashier to settle all accounts as in
their judgment they deemed best. Our money and
valuables were counted and, with the aid of the figures
of our other general accounts, the gross amount of our
deposits ascertained and on that morning, October 17,
1871, our office, improvised in the basement of Presi-
dent Smith's residence, No. 414 Wabash Avenue, was
opened for business. But under what difficulties !
"We had scarcely any room to accommodate the
large number of our customers, we had scarcely any
counters or books to keep our accounts apart; we began
to receive deposits and pay out. Contrary to what
under the circumstances might have been expected,
the close of that day's business found us with more
cash on hand than we had at the opening. This was
highly satisfactory, as it clearly showed that all our
troubles had in no wise shaken the confidence of our
depositors in us. Our clearings with other banks,
involving the payment of some $300,000 of checks,
were effected without the loss of a cent to the bank.
"In accordance with a printed notice in our several
dailies, our depositors brought in their accounts for
verification, as rapidly as possible. Every account
was accompanied by proofs and affidavits as to its cor-
rectness, and when deemed conclusive was admitted at
once and passed upon by placing the amount claimed
to the credit of the party.
"As to the nature and value of our bills discounted,
I will refer you to the report of our last examining
committee which is also presented today, and I trust
that nothing but great satisfaction can be derived from
"In summing over a vast amount of labor on the
part of your clerks, your president and cashier and the
advisory assistance of your trustees, it affords me much
gratification to be able to present to you the accom-
panying statement, showing clearly that we have accom-
plished what was deemed by most certainly a very
difficult and even by many a good business man an
almost impossible task, to-wit : the re-establishment of
all our books and accounts and the restoration of our
business in its former smooth-running order; all that
within a few weeks and without the interruption of a
single day's business after the reopening of the bank,
October 17, 1871.
"All of which is respectfully submitted.
"(Signed) CHARLES HENROTIN, Cashier."
FIRST STATEMENT OF CONDITION OF CHICAGO
First National Bank, .... $1,000,000
Third National Bank, . . . 750,000
Union National Bank, .... 750,000
Fifth National Bank, .... 500,000
Commercial National Bank, . . . 500,000
Manufacturers' National Bank, . . 500,000
Northwestern National Bank, . . 500,000
Corn Exchange National Bank, . . 500,000
German National Bank, . . . 500,000
Merchants' National Bank, . . . 450,000
Cook County National Bank, . . 300,000
National Bank of Illinois, . . . 300,000
Mechanics National Bank, . . . 250,000
City National Bank, .... 250,000
National Bank of Commerce, . . 250,000
Fourth National Bank, .... 200,000
Traders' National Bank, . . . 200,000
Second National Bank, .... 100,000
Union Stock Yards National Bank, . 100,000
Total National Banks, . . $7,900,000
Merchants' Savings Loan and Trust Co., 1,000,000
State Savings Institution, .... 105,000
Lunt, Preston & Kean, . . . 100,000
Prairie State Loan and Trust Company, . 100,000
Union Insurance and Trust Company, . 125,000
International Mutual Trust Company, 200,000
Commercial Loan Company, . . 100,000
Other Banks, not including Savings Banks
or Bank of Montreal, . . . . 1,250,000
Compiled from official statements of December 31st, 1871.
BANKS FOLLOWING THE GREAT FIRE OF 1871.
3i9, J 55-53
1 70.734-9 i
$3,511,123.65 $37,218,536.78 $26,295,707.16
Men and Acts of an Important Era
Men and Acts of an Important Era,
HE official record of The Merchants' Loan
and Trust Company, from the day when
the cashier entered his interesting story of
the great fire of 1871 upon the minute
books, to the day of the bank's semi-centen-
nial, is the record of a bank whose evolution has been
peculiarly one of progressive conservatism. The bank
has grown with Chicago, and has contributed to Chi-
cago's growth. In this generation new banking con-
ditions, to meet the requirements of the trade and
industry of this seething, ever-changing, metropolitan
city of Chicago, require "specialized banking." In
this respect The Merchants' Loan and Trust Com-
pany has not only kept abreast of the times, but it
has, in many ways, anticipated the future.
The story of this era, barren though it be of sensa-
tional events, may find many a sympathetic reader
among those surviving thousands who remember with
pride the more than common personalities who guided
this bank out of the dark ages of empiricism, and,
themselves foundation stones of this metropolis,
entrusted The Merchants' Loan and Trust Company
to no less substantial forces.
The stockholders of The Merchants' Loan and Trust
Company, at the meeting of January 2, 1872, being
the first gathering of the owners of the bank after the
great fire, gave over the uninterrupted business and
administration of the bank to the following trustees:
Solomon A. Smith, William E. Doggett, George
Armour, E. Kendall Rogers, Peter L. Yoe, Augustus
H. Burley, Charles P. Kellogg, John Tyrrell, Edwin
Blackman, Haines H. Magie, and Elias T. Watkins.
At the meeting of the trustees April 4, 1876, there
was a vacant chair, and to their departed colleague,
William E. Doggett, his associates paid tribute, for-
mally characterizing him, who for fourteen years had
been its vice-president, as a faithful and efficient officer
and a valued friend. Into his place by unanimous vote
of the board stepped John Tyrrell.
On May 22, 1876, the bank's administration
received powers to uphold Chicago's good name.
The incident is reflected in an order of the board
authorizing the president "to lend the city of Chicago
any sum which in his judgment he thinks advisable,
the loan to be made with a view of assisting the city
towards preventing its certificates of indebtedness
from going to protest."
On April i, 1878, Charles Henrotin retired from
the office of cashier and secretary, and soon thereafter
Henry E. Lowe was made his successor.
The successful career of The Merchants' Loan and
Trust Company has been under a state charter and
state supervision. It might have been a national bank
by conversion, but it did not become one. What it
might have been matters not, for a half-century of
success does not invite a retrospective study of alterna-
tives. And yet it might have become a national bank
as a board order of January 7, 1879, interestingly
witnesses. In brief, this order empowered the bank's
CYRUS H. MCCORMICK, SR
GEORGE M. PULLMAN
SOLOMON A. SMITH
JOHN W. DOANE
administration "to enquire into the expediency of
organizing a national bank under the acts of Congress,
and of transferring to such organization the business
of this Company," etc., etc.
The memorial records of an institution do not
vividly portray events or men that made them, but
in recording the death of their colleague, Haines
H. Magie, the trustees at their meeting of January
22, 1879, spoke of him as fulfilling the position of
trustee in a "conservative and careful manner," as
being "a genial and pleasant associate," and, again, as
a citizen "long identified with the city's growth and
prosperity, and one who lived an honest, upright and
It was in the same year, 1879, on November 28th,
that the trustees met to confess their debt to their
deceased president, Solomon A. Smith. This they
did in terms of respect and esteem, as to a fellow
trustee and banker, as to a man and citizen, to which
tribute was further added this: "our company has lost
one who, long identified with its business, has always
faithfully and with great ability administered its affairs."
On January^ 188 1, John Tyrrell became his successor.
Faithful men went out and faithful men came in. On
June 7, 1870, Frank C. Osborn was chosen assistant
cashier. It was in this year, in March, that the
quarterly dividend of this bank was raised to three
At the meeting of stockholders, January 6, 1880,
Byron L. Smith first became a trustee, and on January
4, 1 88 1, he was elected vice-president of the bank.
The incorporators of this bank, contemplating its
exercise of several functions, were authorized by
charter to name the institution The Merchants'
Savings, Loan and Trust Company. But, the de-
partment of savings continuing undeveloped, it was
determined at a meeting of the stockholders April
26, 1 88 1, that the original name should be changed to
that which, for nearly a generation, it has borne with
increasing distinction in the world of banking. With
the increase of the bank's business it became expedient
to increase its resources to the limit prescribed for its
capital stock in its charter, and, accordingly, on January
14, 1882, the directors amplified their banking facilities
by an order increasing the stock of the company to
its lawful maximum, that is, to $2,000,000.
In 1883 two good men passed forever from the
counsels of the bank. On May yth the directors
recorded their loss in the decease of Edward K. Rogers,
and on November 5th took similar action in memory
of Palmer V. Kellogg. On December 17, 1883,
Henry E. Lowe, secretary and cashier, moved to
retirement by ill health, left the service of the company,
which he had faithfully served in various capacities
for twenty-five years.
On January 8, 1884, John W. Doane became
president of the bank.
On February 4th of this same year, the vacant
office of cashier and secretary was filled by the election
of Frank C. Osborn. Two days later, February 6,
1884, Orson Smith was unanimously elected by the
directors to be second vice-president of The Merchants'
Loan and Trust Company. Mr. Smith had become
the first incumbent of this office in this bank, inas-
much as at this same meeting it had been created
by an amendment to the by-laws.
The pressure for a greater development of the
bank's trust business appears in an order of the
trustees, April 6, 1885, declaring that "the company
has been requested to accept sundry trusts," and
authorizing the executive committee, in its discretion,
to accept trusts for the best interests of the company.
Prior to this, however, and as early as July, 1880, the
bank had accepted trusteeships for bonds issued under
At the annual meeting of the stockholders, January
5, 1884, Cyrus H. McCormick, Jr., was elected to the
board of trustees, taking the place of his father, inven-
tor and captain of industry. On April 13, 1886, his
associates of the board recorded their appreciation of
Edwin Blackman, deceased.
As the bank grew, new men came into its adminis-
tration to enlarge its powers and broaden its policies.
On January 6, 1890, the directors ordered the enlarge-
ment of the board from eleven to thirteen members,
and on the succeeding day the following men were
elected by the stockholders to become the new larger
board of trustees of this bank.
Augustus H. Burley,
John W. Doane,
Cyrus H. McCormick,
Peter L. Yoe,
John De Koven,
George M. Pullman,
Elias T. Watkins,
Erskine M. Phelps,
When Chicago girded herself for her colossal and
triumphant achievement, the World's Columbian Ex-
position, its creators received from this bank $15,000,
the act of the bank's officers making this subscription
being ratified by the directors, April 7, 1890. In
further promotion of the financing of this vast under-
taking, the directors, on October 3, 1892, authorized
subscription for the six per cent debenture bonds of
the Fair, then assuming appreciable structural form,
such investment, however, not to exceed the par value
of $200,000. On November 6, 1893, the directors
ordered the following disposition of the bank's stock
subscription to the glorious venture:
"Resolved, that the 1500 shares of the World's
Columbian Exposition stock belonging to the bank be
donated to the Columbian Museum of Chicago, subject
to its organization, and that the stockholders of The
Merchants' Loan and Trust Company be requested to
ratify same at the next annual meeting. And should
same not be ratified by the stockholders, then this
board as individuals take the responsibility of the same
by furnishing payment at the market value of the
stock." The stockholders duly ratified the action of
On March 2, 1891, F. N. Wilder was appointed
assistant cashier. On March 17, 1892, the directors
accepted the resignation of P. L. Yoe as vice-president,
and filled the vacancy by election of Orson Smith. On
January 7, 1895, the directors secured the services, as
second vice-president, of E. D. Hulbert, at that time
cashier of The First National Bank of Winona, Minn.
On February 13, 1895, J. G. Orchard was appointed
cashier of the bank in place of Frank C. Osborn,
deceased, for thirty years an exemplary employe of the
On June 6, 1896, the auditor of public accounts of
the State of Illinois, renewed the charter of The Mer-
chants' Loan and Trust Company for ninety-nine years.
On January 7, 1897, J. W. Doane, having
announced that he felt compelled to decline acceptance
of another term of office, the vice-president, Orson
Smith, therefore fulfilled the functions of the office
until his actual election thereto later on.
When, in 1897, death claimed George M. Pullman,
his colleagues on the board of directors of this bank, at
a meeting, October 22, expressed themselves in the
following comprehensive memorial:
" Resolved, that the members of the board of direc-
tors of The Merchants' Loan and Trust Company have
received with profound sorrow the intelligence of the
death of their late colleague, George M. Pullman, whose
business skill, sound judgment, and enlightened coun-
sel were greatly appreciated by the board in the dis-
charge of the duties devolving upon it; that they
deplore his loss, and while cherishing with the highest
pleasure the remembrance of their association with him
as a trustee and director, take equal pride, in common
with his fellow citizens of Chicago, in the great position
he achieved during his life as a useful, public spirited,
and beneficent man."
On January 4, 1898, there was elected to the board
of directors, Moses J. Wentworth and Edmund D.
Hulbert, in place of George M. Pullman and John
Another faithful custodian of high trusts finished
his watch when Peter L. Yoe died in 1898. On April
6, his associates recorded their loss, and on May 3,
again testified to the removal of a staunch link from their
chain in the death of John De Koven.
On June 9, 1898, Enos M. Barton was elected to
the vacancy in the board of directors.
At a meeting of the directors April 3, 1901, the
death of John W. Doane was recorded with fitting
words in recognition of his services as president and
director of the bank.
On April 2, 1903, the directors rilled a vacancy in
the board by the addition of Elbert H. Gary to its
Another step in the bank's development was taken
when at a meeting of the stockholders, June 9, 1903,
capital stock of the company was ordered increased
from $2,000,000 to $3,000,000.
January 5, 1904, the directors characterized their
affectionate regard for their colleague, Augustus H.
Burley, who had been a director since the organization
of the bank in 1857, in the following words:
"He has seen the beginning of the bank and
watched its growth, and in all its stages of develop-
ment as a financial institution of the city of Chicago, it
has had the benefit of his conservative counsel and
sound judgment. Ever ready and most conscientious
and enlightened in performance of his duties as director
of The Merchants' Loan and Trust Company, he was
equally so in the public positions, state, county and
municipal, to which people at different times, during
his career, assigned him. We mourn him therefore
not only as a colleague, but also as a citizen and a pub-
lic officer, who set a high example to his fellows."
At this same meeting of the board another of the
stalwarts received the tribute of the good and faithful
servant in the person of Elias T. Watkins.
At the meeting of the stockholders, January 5,
1904, there were elected to the board of directors
T. J. Lefens, Clarence A. Burley, and Chauncey Keep.
On April 6, 1906, the directors placed upon the
records this tribute to their late colleague, Marshall
Field, who had shared in counsels of the bank so many
years, and was at the time of his death the oldest liv-
ing director in point of service.
"The members of the board of directors of The
Merchants' Loan and Trust Company wish to express
their profound sorrow for the loss which has come to
the board and to the bank by the death of Marshall
" Mr. Field became a stockholder of The Merchants'
Loan and Trust Company in 1876, and a member of
its board of directors January 2, 1877. At his death
he was the last survivor of the board elected at that
time and had been longer a director than any man now
living. He largely aided in the development and the
growth of the bank, and was always ready to assist and
support its- officers and assume responsibility in the
important matters upon which he was consulted.
"It is given to few men to attain such great success
and leave a reputation unsullied and honorable, and few
there are, whose career is such an example of what may
be accomplished by upright conduct, combined with
great ability. In the death of Marshall Field the com-
munity has lost a high-minded and conscientious
citizen, this bank an able and wise director, and his
colleagues a prudent counselor and friend."
While these resolutions are the tribute of personal
friends and bank associates, they reflect the sentiments
of the press and public, as expressed at the time of his
On November 7, 1906, John S. Runnells was
elected as a director to fill the vacancy on the board
which was caused by the death of Marshall Field.
The foregoing in briefest form sketches the evolu-
tion of this bank from the day of the great fire to the
present time. Such a chronicle of events, in this era
of large and startling transformations in business
and finance, may seem commonplace, but it is really
not so, for these events are the occasional markers
to the well-ordered march of a bank of many depart-
ments and more than ordinary banking powers; the
whole being the product of wise management shaping
internal growth in a time characterized by expansion
through combination. Every watchman of the old
guard who dropped from the ranks in the past
generation receiving, as above suggested, the tribute
of his colleagues was a potent Chicago fact, his life
and service a monument to good banking and good
citizenship. He and his predecessors it was who did
so much to make the state bank a tower of strength in
Illinois. To him honor.
To read the names of the builders of this bank who
have passed away is to read the names of those well up
toward the top of Chicago's roll of honor. Among
them are men who have acquired international reputa-
tion and contributed largely to the prosperity of this
George Armour established the firm of Armour,
Dole & Co. in 1860 and engaged in the grain and
commission business, the outgrowth of which was an
extensive line of grain elevators on the railroads radi-
ating from Chicago and which established Chicago's
early supremacy as a grain center. He was president
of the board of trade in 1875, anc ^ was popularly
known as the father of the grain elevator system. He
JOHN HIGH, JR.
E. KENDALL ROGERS
HAINES H. MAGIE
EI.IAS T. WATKINS
Former Cashier One of the Founders of this
Bank The First Depositor
was a director of this bank at the time of the great fire
and retired in 1881.
Charles P. Kellogg was associated with his father in
the wholesale clothing business; the firm in 1868 was
known as C. P. Kellogg Co. In 1870 he, with other
prominent merchants, organized the Commercial Club.
He was a director at the time of the Chicago fire and
served until 1881.
Edward Kendall Rogers was in the wholesale iron
and coal business. The firm was established in 1840.
He was one of the organizers of the Chicago Board
of Trade and a director of this bank for over twenty
years, retiring in 1883.
Palmer V. Kellogg was a wholesale clothing mer-
chant and established the house of P. V. Kellogg in
1859. After retiring from active business he was a
director in this bank for many years, retiring in 1883.
Frank C. Osborn began his business career as a
young man with this bank, and owing to his ability
and fidelity was promoted from time to time. He
served as cashier from 1884 to l %95'
George M. Pullman was the founder of the Pull-
man Palace Car Company, now known as the Pullman
Company. This concern was the first in the world to
engage in the building of "sleeping, hotel and palace
cars." The name Pullman has become intimately asso-
ciated all over the world with luxurious travel. He
built the town of Pullman, Illinois, as a home for his
great enterprise; he was an idealist as well as practical
producer and his great desire was to surround his
workmen with model working conditions. He was a
director of this bank from 1 88 1 until his death in 1897.
Peter L. Yoe was vice-president of this bank from
1885 to 1892; he served as a director for twenty-six
years until the time of his death in 1898. During the
great fire of 1871 his house on Terrace Row was a
temporary refuge for the cash and valuables of this
Edwin Blackman was associated for many years
with Magie & High; he had extensive real estate
interests in the city. He served as a director for over
sixteen years and until the time of his death in 1886.
John DeKoven began his business career in Chicago
with I. H. Burch & Co., bankers, and during his life
was a banker. He was identified with many of Chi-
cago's leading banks and served as a director of this
institution from 1881 to 1898.
John Tyrrell was a prominent merchant of early
Chicago. The firm of Burley & Tyrrell still continues
the business. He was a director of this bank at the
time of the fire and later served as vice-president from
1877 until 1 88 1, and as president from 1881 to 1883.
He retired from the board of directors in 1898.
John W. Doane came to Chicago in 1855 and started
the business which afterwards became John W. Doane
& Company, wholesale importers. Retiring from active
commercial business, he became identified with this
bank, first as a director in 1880 to 1901 and later
serving as president from 1884 to 1897.
Elias T. Watkins was a progressive man, con-
stantly working for the city's improvement; he gave
to Chicago its first gas company, known then as the
Chicago Gas Light and Coke Company. He was a
director of this bank for over thirty years, until his
death in 1903.
Cyrus H. McCormick, Sr., was a Virginian. Before
becoming of age he had invented improvements in three
different agricultural implements. At twenty -five,
in his father's shop and with his own hands, he made
his first reaper. With the help of father and brothers
the business grew to ten machines a year. The first
consignment of machines to the west came in 1844
from Virginia via New Orleans and the Mississippi
and the Ohio rivers. In 1847 ne came to Chicago.
In 1848 he built 700, and in 1849 over 1500 reapers.
In 1851 Mr. McCormick, at the World's Fair in
London, gave the old world his new idea. He
triumphed, his reaper being pronounced by the London
Times to be worth the whole show. When he pleaded
for his American patent, his representative declared
that the McCormick reaper brought an annual income
to the United States of over $55,000,000, and moved
the line of civilization westward thirty miles a year.
France officially told this American that he had done
more for the cause of agriculture than any other living
man. His manufacturing works fell before the
fire but to rise and become what all men know them
to be today. He was an organizer of this bank and
a stockholder until his death in 1884.
Marshall Field was born in 1835 and came to Chi-
cago when twenty years of age. He began his business
career as a clerk in 1856 with the firm of Cooley,
Wadsworth & Co. Four years later he was admitted
as a partner and the firm became Farwell, Field & Co.
In 1865 he withdrew and then organized the firm of
Field, Palmer & Leiter. Potter Palmer retired
in a short time, the firm became Field, Leiter & Co.,
continuing for fifteen years, and afterwards became
Marshall Field & Co. in 1881. The growth of his
wholesale and retail business made him pre-eminently
the merchant prince of the world. He was identified
in innumerable ways with the upbuilding of this city.
He was recognized as Chicago's leading citizen and a
generous philanthropist. He acquired wealth and was
rated as one of the rich men of America. He was
a director of this bank and influenced its affairs from
1877 to the time of his death in 1906. He made The
Merchants' Loan and Trust Company one of the
executors and the final trustee of his estate.
Albert Keep was a director of The Merchants'
Loan and Trust Company from 1884 until the time
of his death, May n, 1907. In 1851 he estab-
lished a wholesale dry goods store in Chicago, under
the name of Peck, Keep & Co. In 1856 he devoted
himself to investments. In 1864, after the successful
promotion of important interests for leading railways,
he became a director and member of the executive
committee of the Lake Shore road. Nine years later,
as president of the Chicago and Northwestern road, he
entered upon the development of that property. He
was a director of the Chicago Home for Incurables
and the John Crerar Library.
Long Time Employees
ISAAC H. PERVIER
JOHN M. OOSTERBECK
Long Time Employees
WILLIAM DENT BEALL
CHARLES. L. GARY
ROBERT N. WARD
Long Time Employees
ISAAC W. BROWN
WILLIAM B. HALL
Early Banking in Illinois
Early Banking in Illinois
HE organization of The Merchants' Loan and
Trust Company fifty years ago was reaction
from the insane to the sane, from the empir-
ical to the approximately scientific. How
opportune, how necessary even, became the
inauguration of the kind of banking to be introduced
by this bank will be inferred from the reading of a
sketch of the characteristics of early banking in Illi-
Banking in pioneer Chicago was barter white man,
red man, guns, beads, blankets, etc., for the products
of forest and stream. It was that old inhabitant of
historic activities, Gurdon S. Hubbard, who seems to
have inaugurated the rudimentary processes of Chi-
cago's banking business, when, upon some older settle-
ment east of Chicago, Buffalo for instance, he drew his
bill of exchange for the promotion of trade between the
frontier village of Chicago and the older and capitalistic
east. In this early period silver coin was the chief
currency; the only paper money in use, being the
improvised scrip with which an Indian trader satisfied
the white men and red men constituting the business
world of primitive Chicago.
In 1809 the Territory of Illinois was set off from
Indiana, and the seat of government was set up at
Kaskaskia, Nathaniel Pope, a Kentuckian, becoming
secretary of the new territory. The whole vast domain
was divided into just two counties, being Randolph on
the north, and St. Clair on the south. In 1816 Pope
became Illinois' delegate in Congress and when, in
1818, the bill for Illinois' admission came up, and the
vital matter of the new state's northern boundary arose,
it was Delegate Pope who got the northern line fixed
at the parallel, forty-two degrees thirty minutes, north,
and so gained for the new state, contact with Lake
Michigan, and that supreme geographical advantage
for its forthcoming yet unforseen metropolis which,
more than any one single condition, is steadily
upbuilding Chicago as the nation's commercial capital
So, by a masterly modification of the famous ordi-
nance of 1787, when the Territory of Illinois became a
State, the petty trading -post beside river and lake
became incorporated in a commonwealth of incalculable
possibilities. Delegate Pope had a large vision for his
time, for he saw an element of national strength in the
geographical position of the lake states, and he fore-
saw a canal between the lake port, Chicago, and the
Illinois River; but with all his foresight he built larger
than he knew, and the sequel to his statemanship is
partly demonstrated in the banks and banking, founded
upon the production of the continent's primary pro-
ducts, and their distribution through the world's
greatest railway center and fresh water port.
On December 3, 1818, Illinois was formally
admitted into the union. As early as 1816 there was
passed an act by the territorial legislature incorporating
at Shawneetown the "President, Directors and Com-
pany of the Bank of Illinois." This was Illinois'
first legalized "wild-cat." When the State's constitu-
tion was adopted, August 26, 1818, Illinois had two
banks in operation, that is to say, the bank at Shawnee-
town and one at Edwardsville, the latter already
moribund. Both these banks carried the public moneys
received from the sale of Illinois lands. The new
State of Illinois incorporated its first State bank March
22, 1819, under the title of the "President, Directors
and Company of the State Bank of Illinois." And
this begins the instructive experience of the State of
Illinois as a banker.
The amount of capital was limited to $500,000, all
of which was owned by the State, which through the
legislature was invested with its entire management
and control. The president and directors were to be
elected by the Senate and House of Representatives
on a joint ballot, and the cashiers appointed by a
majority of the directors. The property, lands, and
faith of the State were pledged without any restrictions
for the redemption of the bills issued, and the State
was pledged at or before the expiration of the ten
years (the time of its charter), to redeem all bills pre-
sented in gold or silver. The bills were declared legal
tender for all debts due the State. The school fund
and all specie, or "land-office money," were required
to be deposited in the principal bank.
Two thousand dollars was appropriated to procure
plates and start the financial institution on its career
of beneficence. Three hundred thousand dollars was
to be put into circulation. It was to be distributed in
the several districts in ratio to the population. The
bills were to be loaned on notes, secured by mortgage,
at the rate of six per cent, per annum. As the bills
themselves bore an interest of two per cent, per annum,
the borrower virtually paid but four per cent, for his
money. No person was entitled to a loan of more
than $> 1,000.
The officers of the bank were entitled for their
services, to banking accommodations on approved
security, at two per cent, per annum, in the following
amounts: president of the principal bank, $2,000; the
president of each branch, $1,000; and each director,
$750. Four branches were established, at Edwards-
ville, Madison County; at Brownsville, Jackson County;
at Shawneetown, Gallatin County; and at the seat of
justice in Edwards County.
The currency soon flooded the State and all gold
and silver disappeared as a circulating medium, and, as
was quite natural, did not enter the vaults of the wild-
cat bank or any of its branches. The money was
scarcely in circulation before it depreciated to seventy
cents on the dollar, then to fifty, and so on down to
twenty-five cents, when it disappeared from circulation
and found its way into the hands of shrewd speculators,
who looked to its ultimate redemption by the State.
There was subsequently a special law passed, legal-
izing the payment of the officers of the State Govern-
ment in this depreciated paper at its current value.
As under the terms of the charter, all taxes and
revenue of the State were payable in these bills, the
State at last became hopelessly entangled in its own
financial system and was forced to withdraw the circu-
lation. This was begun in 1824, but the currency
continued to circulate until the expiration of the
charter in 1831, when the State closed its banking
business at a loss exceeding the full amount of the
original issue. Governor Thomas Ford, in his history
of Illinois, summed up the result as follows:
" In the course of ten years, it (Illinois) must have
lost more than $150,000, by receiving a depreciated
currency, $150,000 more by paying it out, and
$100,000 of the loans which were never repaid by the
borrowers, and which the State had to make good, by
receiving the bills of the bank for taxes, by funding
some at six per cent, interest, and paying a part in
cash, in the year 1831.
"In closing up the affairs of the bank the State
borrowed of one Samuel Wiggins, January 29, 1831,
the sum of $100,000.
"It is stated by contemporary writers that the shrewd
and provident Wiggins paid over a large part of the
loan to the State in bills of the old State Bank, which
had been bought up by him at a low price and which
the State now redeemed at par. The loan was at the
time extremely unpopular, and threats of repudiation
were rife for years afterwards. It was, however, paid
ultimately, principal and interest, and the credit of the
State saved from blemish."
Peace, following the Indian disturbances known as
the Blackhawk War, set a tide of Eastern emigration
through Chicago where many pioneers tarried and so
augmented its population that in 1 845 there were resi-
dent here 3,265 active and busy people. The need of
a bank was felt, a bank of issue, a bank to make money,
nor was the need less stringent under pressure of the
passion for land speculation sweeping the country from
east to west.
To meet an obvious want, the legislature of the
State extended the charter of the Shawneetown Bank,
and, on February 13, 1835, incorporated another
State Bank, " The President, Directors and Company
of the State Bank of Illinois," with life to run until
January i, 1860. Its capital was to be $1,500,000.
It was, however, provided that the capital stock might
be increased $1,000,000 more by individual subscrip-
This bank was to be in Springfield with not more
than six branches at other points ; this number, how-
ever, being increased the next year to nine, and the
time for redemption of its bills without forfeiture of
charter being extended from ten to fifty days.
This new state bank was not a bank managed by
the State as had been the first state bank of Illinois,
although by payment of $100,000 for stock reserved,
it was authorized by appointment of the governor, to
have two directors on the bank's board. It was one
of the branches of this new state bank which became,
in 1835, Chicago's first bank.
The new bank announced on December 5, 1835,
that it would soon stand ready to serve the public
under direction of John H. Kinzie (president), Gur-
don S. Hubbard, Peter Pruyne, Elijah K. Hubbard,
Richard J. Hamilton, Walter Kimball, Henry B.
Clarke, George W. Dole, Edmund Dick Taylor, Wm.
H. Brown (cashier). This bank began business about
December 1 5, and with large deposits, at the corner
of La Salle and South Water streets.
The currency in circulation in Chicago was in part
the bills of the Illinois State Bank, and in part the
issues of remote banks which contributed to the peril-
ous inflation which was to be punctured in the Amer-
ican crash of 1837. Now the madness of inflationist,
speculator and boomer took evil hold upon Illinois.
The cry was for public internal improvements, and
on February 27, 1837, the legislature actually inau-
gurated an internal development system whereby
$400,000 was to be spent upon waterways, $9,650,000
upon railways, and $200,000 upon roads and bridges.
And the sum, great in those days, of $10,250,000 was
actually appropriated by the legislature to materialize
The Portland Block in 1881
Southwest Corner Washington and Dearborn Streets
the popular vision. But there must be money for
these grand projects.
In the legislative session of 1837, year of trouble,
the State increased the capital stock of the Shawnee-
town and state banks until it amounted to $4,800,000
in case of the state bank, $2,100,000 being subscribed
by the State, payment to be made in part from the
State's dividends of the surplus revenues of the United
States, and the remainder from sale of state bonds.
In the case of the Shawneetown Bank, $1,500,000
in capital stock was taken by the State. In each case
the State was a majority stockholder, although private
stockholders controlled a majority of the directors.
The banks were fiscal agents of the authorized
canal and railroad funds. When the state bonds were
offered in open market they could not be sold at par,
and it is said that the bonds taken by the state bank
were never sold, although the bank went about extend-
ing its business on such extraordinary security.
Then there descended upon Illinois, with vast and
improvident ventures thus financed, the panic of 1837,
when, throughout the United States, suspension of
specie payment was the rule. The state bank was
indeed in trouble. Failures of speculative customers
had weakened it, and, as the state financial agent, it
owed the canal and railroad funds large amounts. In
July of this calamitous year the legislature, in special
session, legalized suspension of specie payment.
Never after did the state bank redeem its obliga-
tions in hard money, although under the act it con-
tinued to be the State's financial agent.
Illinois struggled on with its grievous system of
public improvements a little longer, and then state
bonds proving utterly unfruitful sources of revenue
in 1839, in extra session of the legislature, the whole
proud and foolish undertaking was formally abandoned,
the outlay having been 16,014,749.53 and the visible
investment a network of unfinished railroads. It was
a sorry spectacle presented by Illinois when her bonds
went begging about New York and London at fifty
and seventy-five per cent, below par.
In 1843 the State Bank retired from the banking
business, arbitrarily forcing liquidation of the banks
which it virtually owned. In this year the Chicago
branch of the State Bank died, and for nine years after
the banking of Illinois was done entirely by private
bankers, the currency in vogue being issues of banks in
other States, legal or illegalm Illinois as it might be.
And still the "wild-cat" raged in American bank-
ing something for nothing, nothing for something
"heads, I win; tails, you lose." One class of the
creators of "wild-cat" currency was insurance com-
panies doing a banking business. But in those days
of "wild-cat" banking there was at least one real bank,
of parentage no more legitimate than branded the little
institutions so freely issuing promises never to be made
This bank was the creation of George Smith and
Alexander Mitchell, Scotchmen of prowess and probity,
men of later fame and wealth, and the bank was named
the Wisconsin Marine and Fire Insurance Company.
George Smith's bank succeeded on ability and honor,
good assets always. Like other folks Smith issued his
certificates, but, unlike many others, he redeemed
them. If his business was illegal it was not dishonest,
and, when in 1853, after years of unsuccessful assault
upon its credit, his company was legalized under the
banking law of Wisconsin, it passed into the second
chapter of honorable public service, and continual
possessor of a good name on all continents.
The era of the irredeemable continued. An infant
city with an illimitable business future called for stable,
honest money. On December 26, 1850, at a meeting
of citizens at the Court House, the legislature was
memoralized in part as follows:
"Banks properly formed and conducted would be of
immense benefit to all the interests of the State.
Transactions have become larger, and, rapidly increas-
ing, requiring a circulating medium, convenient and
convertible at home into gold and silver at the option
of the holder. By withholding bank charters the
circulation of paper currency is not checked, but, on
the contrary, we are flooded with paper from all parts
of the Union and Canada, and, in many instances,
defrauding our citizens by passing worthless paper
upon them for their labor or their products.
"We, therefore, would respectfully ask you, as the
guardians of the growing interests of the State, to give
us at the earliest moment such a general banking law
as you in your wisdom may determine, placing such
safeguards and restrictions in its provisions as will
amply secure the bill-holder from loss, making it open
for all to engage in who conform to its require-
This petition brought forth the State general banking
law of February 15, 1851, the latter essentially a copy
of the New York law, and parent of sundry legal
banks of issue. This act was amended February 10,
1853. The banking act of 1851 was ratified by a
popular vote, the vote standing 37,578 for and 31,321
against the law.
A condensed record of certain unsuccessful institu-
tions of the period would contain such significant
entries as these:
"Closed, but with all circulation redeemed."
"Retired from business, but redeeming circulation
"Suspended, but redeeming circulation."
"Retired from business."
"Closed by protest, with circulation but partially
"Circulation retired and paid up in full."
"Forced into liquidation, but circulation redeemed."
"Involuntary liquidation, all procurable currency
In this category of fortunate and unfortunate, wise
and foolish, must be chronicled a comically prepos-
terous adventure in reputed banking. This institution,
started in 1852, was named the Bank of Chicago, and
was managed by Seth Paine and Company, the per-
sonality of the latter being Ira B. Eddy. To pro-
mote the Bank of Chicago, was issued eight numbers
of a publication entitled the "Christian Banker" and
for the reception of authoritative information on bank-
ing, from the great departed, a trance medium was
brought in to set up her psychic wire. Utterances of
the "Christian Banker" and other literature were the
"Christianity being the purest and scarcest metal,
like gold among bankers, we take it for our standard;
and everything and everybody which does not come
up to that standard, we quote below par, until they
reach the point where neither zero or Nero can
"Bring on your bills for redemption, and when
objection is made to the various trash paid out by
Tucker, Burch, Smith, and other chaps here, we will
open our mouth, or the Lord will open the mouth of
the Balaam's ass to keep you from being shaved
twelve per cent by the Great Mogul and his under-
strappers, who next to R. K., pursue the people
with swiftest destruction, and keep you trotting over
here with bills for redemption till you wear out more
shoe leather than Jo. Kenyon's whole stock amounts
to all because you don't know any better than to
keep your accounts with men who throw us out
because we reduce rates.
"We loan to no one to pay debts. We loan to no
one to aid in murder of anything which has life. We
loan to no man to aid in speculating in that which is
necessary to life. We loan nothing on real estate,
believing that real estate cannot be bought and sold,
and that possession with use is the only title. We
loan nothing to aid in making or selling intoxicating
liquors, or tobacco in any of its forms. We loan noth-
ing to gamblers or usurers who borrow to loan again.
We loan nothing except for aiding the natural exchange
between the producer and consumer, whether of body,
soul or spirit, and for the time necessary to produce
the exchange. Our basis for making loans is estab-
lished character of the borrower. He must be a
temperate, honest and religious man or woman, with a
mind sufficiently developed to understand his business.
We are prepared to loan any amount needed for such
business by such men."
Well, the Chicago Bank did redeem its currency,
but the bank ended in the courts: Ira B. Eddy was
temporarily committed to an insane asylum, and Seth
Paine, apparently larger of heart than wise of head,
retired to the practice of socialistic theories which had
early engaged his eccentric mind.
The rivalries and irregularities of Chicago banking
precipitated in December of 1852 a so-called bank war,
representatives of the legal banks securing the indict-
ment of several representatives of illegal banking,
among the latter George Smith, of the Wisconsin
Marine and Fire Insurance Company. Of the com-
plications of this campaign the Chicago "Democrat"
"The regular banks have succeeded in getting about
a dozen of the irregular banks indicted. The irregular
ones are demanding specie as fast as they can get bills
to demand it upon. But the joke is many of our reg-
ular banks are irregular ones too; and keep some old
corporation or some old name to get extra shinplasters
under, or extra interest with. The wild-cats who have
regular bankers for dormant partners were not indicted."
But the inevitable litigation following indictment
promised no speedy relief to the Chicago banking sit-
uation, so that by the more direct route of legislation
J. Young Scammon and other regulars secured from the
legislature a prohibitory supplement to the banking
law of 1851, whereby it became almost a felony to do
a banking business in this state save under statutory
This act, approved February 10, 1853, ended illegal
banking in Illinois, although it did not check the flood
of bills from other states, and particularly from Geor-
gia, the bills, of whose banks were specifically named
in a newspaper advertisement published December 27,
1855, and signed by 120 business men and firms,
urging Chicago banks to refuse to receive these bills on
deposit. To which appeal an equal number of Chica-
goans rejoined in the same way, calling the effort "to
discredit any circulating medium that is redeemed
promptly where issued, as not only unwise but exceed-
ingly mischievous," further declaring that the local
o j * ^y
interest rate proved a dearth rather than a sufficiency
of money, and further adding:
"The fact that two of the Georgia banks have stood
a continuous run for four months or more, and have
redeemed a half million per month of their issue in gold
and silver, has increased our confidence in these banks,
and the ability and disposition of the stockholders to
promptly redeem all their issues. We shall therefore
continue to receive and pay out, use and give credit to
Georgia money, the same as the bills of other states so
long as they are redeemed in specie at the banks where
issued, and we advise others who are engaged in busi-
ness to do the same until a full remedy can be had by
amending our own banking law." To which may be
added as an historical fact the statement that many
Georgia banks were owned or controlled in Chicago
where also their bills were redeemable.
Verily, it was a day of motley money. In 1855 a
railway conductor, collecting a total $203, had in his
pocket bank bills from twelve states, Georgia banks
being responsible for $115 of the total; Illinois state
bank twenty dollars; and Chicago banks one dollar.
Legitimized banking was conducted in Chicago between
1851 and 1857, by the following institutions:
Marine Bank of Chicago (J. Young Scammon);
Bank of America (George Smith & Co.) ; Bank of
Commerce (Davisson, McCalla & Co.); City Bank
(Bradley & Curtis); Chicago Bank (I. H. Burch &
Co.); Exchange Bank (H. A. Tucker & Co.); Union
Bank (Forrest Bros. & Co.); Farmers Bank (Chase
Bros. & Co.) ; Phoenix Bank (N. C. Roe & Co.);
Merchants' and Mechanics' Bank (Levis Boone).
All of these were banks of issue, a noticeable
security for their circulation being Virginia and Missouri
state bonds. It is recorded that whatever disasters
these banks encountered, the holders of these bills did
not suffer. But there were other banks than the above
banks of issue doing business in Chicago after the state
law of 1851 began to give form and rule to Illinois
banking, namely: the Butchers' and Drovers Bank,
Metropolitan Bank, Swift's Bank, Chicago Savings
Bank, Dollar Savings Bank, Marine Savings Bank,
Dime Savings Bank, Illinois Savings Institution, John
H. Kinzie, first president; Chicago Marine and Fire
Insurance Co., chartered in 1836, after decease revived
in 1848 and existing to the panic of 1856 and 1857,
J. Young Scammon, president, as the largest moneyed
institution in Illinois,with actual cash capital of $500,000.
There was one other bank, which took more than
ordinarily deep root at this period The Merchants'
Savings, Loan and Trust Company, which, being
founded in 1857, had for companions after subsidence
of the financial earthquake twenty-seven banking insti-
tutions. Today, as it happens, not one of the twenty-
seven is in existence.
Illinois banking between the panic 1856 and 1857
and the outbreak of the civil war continued to show
the results of defective legislation in the guile of the
pirate and the embarrassment of the public. A bank
with little or no true capital would be organized at a
remote and inaccessible interior point, its circulation
based upon bonds beyond which the state auditor
declined to look for actual banking capital. Then from
the obscure cross roads the convenient promises to pay
fluttered forth, and divers and sundry honest people
began to be the victims of that system of banking
known as the "wild-cat" and "stump-tail." Of course
it does not follow that "wild-cat" banking could not
have made good, but it is a fact that the peculiar rela-
tion between their solvency and their guarantors, the
several states of the Southern Confederacy, forbade a
final demonstration. But the insufficiency of security
of "wild-cat" circulation became painfully evident
when, in the storm and stress period of 1857, a west-
ern debtor sought the equivalent of this vagabond
paper in eastern or foreign exchange or in specie.
It is written that, with barely two exceptions, not a
bank in Illinois in this strenuous time could keep its
circulation at par with gold. But this sort of money
was the best there was and so its circulation went on.
On the eve of Lincoln's election in 1860, capitalists
were in two classes in their attitude toward the prevail-
ing system, one upholding the existing banking law,
another contending that the whole thing was a miscon-
ception of sound finance. Chicago's interest in the
controversy was not acutely personal, for there were
but few banks of issue here, yet none the less she
needed sound money.
But a crisis of unconceivable magnitude approached.
Secession showed its purpose and its immediate finan-
cial consequences. The banks of Illinois had been
maintaining more than two-thirds of their aggregate
circulation of $12,320,694 on the bonds of southern
states. Expansion had prevailed, and Illinois currency
had no uniform value.
The winter and spring of 1861, dawn of civil strife,
found Chicago in a demoralizing state of anxiety and
uncertainty. Trade seemed about to suffer almost
complete paralysis. Exchange rose and incessantly
fluctuated in response to the crazy money seeking to
buy it, while from the banks came daily bulletins
giving ratings of the varieties of discredited and
accepted circulations. Bills actually had a current
valuation between twenty per cent, and par. No man
knew his wealth.
The business interests in union with the Chicago
Board of Trade sought to increase popular knowledge
about currency values, but the people were unsteady
as well they might be. Editorial utterances such as
these from the Chicago Democrat, serve best to show
the unsettled business conditions and the anxiety of the
" No man is safe sleeping over night with one dol-
lar of Illinois currency in his pockets. * * * On
Saturday night next the laborers must have their
wages. Will the 'wild-cat' give them gold or silver
or the Dunham currency, or will they avail themselves
of that opportunity to pay out their miserable c wild-
cat?' Laborers of Chicago, arouse! * * * It is
your sweat, it is your toil, that aggrandizes the Wild-
cat' aristocracy of Chicago. They are fattening upon
your blood. * * * Wild-cat bankers are worse than
The Board of Trade formally entered protest, and
the Democrat promptly replied that more similar talk
would be forthcoming.
In the first part of the summer the bank situation
was in such a bad way that the Marine Bank asked
the Board of Education as a municipal depositor to
accept sixty-five cents on the dollar, to which propo-
sition John Wentworth and others made resistance.
About this time there ceased to be an Illinois banking
system which the State's commercial and industrial
capital found of any use.
In 1860, before the crash of secession came, there
were no solvent state banks, with an aggregate circu-
lation, as above said, of $12,320,694 founded upon
$9,527,500 worth of securities issued by Missouri,
Tennessee, Virginia, Louisiana, North Carolina, South
Carolina, Georgia and Kentucky. Two years after, in
November 1862, ninety-three banks were in process
of suspension or had closed. The liquidating banks
paid about sixty per cent, on their currency. Of
twenty-two solvent banks the circulation had been
reduced from $12,320,694 to $566,163 in two years.
So died the "wild-cat" in Illinois. True, in legis-
lative session of 1861, the general banking law was
amended so as to wind up the feeble, invigorate the
promising, provide more efficiently for redemption,
and place greater foundations under circulation; but
neither such beneficent provisions nor an act passed
and rejected by the people at the polls, designed to
"establish a general system of banking upon a specie
basis," could create for Illinois a circulating medium,
and none of her own henceforth had she until national
banks came. But currency from everywhere else,
state notes and government greenbacks, flooded this
commercial center, the worthless paper driving the
better from Washington out of circulation both in
Chicago and in its vast tributary territory.
Then, striving towards uniformity and security in
the creation of a circulating medium, the people of the
United States passed the national banking act in
March, 1863, an( ^ tne people of Chicago, represented
in meetings at the Board of Trade, the banks con-
curring, ordained that on and after May i6th, all
transactions, whether of buying or selling, should be
based on legal tender treasury notes. Further order
and security came to Chicago banking when, on April
6, 1865, was organized the Chicago Clearing House,
with officers as follows : William F. Coolbaugh,
President; Josiah Lombard, Vice-President; E. E.
Braisted, E. I. Tinkham, Ira Holmes, A. C. Badger,
Lyman J. Gage, Clearing House Committee; George
A. Ives, Manager. Thenceforth, until the momen-
tary paralysis caused by the great fire of 1871, the
story of Chicago banking became one of expansion,
elimination and progress.
Thus became inaugurated in the central market of
the continent a system of sounder banking. At the
close of 1864 eight national banks were in operation.
To a market ever demanding larger banking facilities,
The Merchants' Loan and Trust Company continued
to discharge a role commensurate with the necessities
of this community and with the purposes of the
founders of this institution. The situation at this
time, which this bank aided to create and develop, was
thus epitomized by the Chicago Tribune:
"The banking transactions of Chicago are full of
cash. It stands as the paymaster of the great north-
west, and disburses the millions in currency that is
required to move its great food staples. Each year by
the opening of new channels and development of new
currents of trade has evidenced our legitimate and
inevitable field. The banking capital of Chicago at
the close of this year (1864) has more than doubled in
the past twelve months, and three times as large as
that of 1862. Within the past fortnight one of our
leading banking houses in a single day shows trans-
actions reaching two million and a half dollars, and
there are other instances almost equally striking. It
must be remembered that this is currency actually
handled, counted, piled, and carried away. One
million dollars a day goes into the country to the
producer. Well may the bankers rejoice that days of
'rag money* are over."
From the close of 1864 to 1871, year of the great
fire, the history of Chicago banking is serene and
uneventful. Together grew trade and banking facil-
ities, the demands of the former justifying at the time
of the fire nineteen national banks and nine state or
private institutions, savings banks not included. The
total bank capital of the city was then $13,500,000.
When the conflagration of 1871 had done its work,
the building of every national bank but one was found
to have succumbed. The vaults of the private banks
also were, as a rule, in ruins. The fire broke out on
the evening of Sunday, October 8. As early as the
Wednesday following, at least twelve banks had tem-
porary quarters. On Thursday the banks resolved to
repay depositors fifteen per cent. The accommoda-
tion was not munificent, but on the other hand, for the
good of the distracted city, a run upon the banks was
to be avoided. Much of the assets of the banks was
commercial paper, which, for the maintenance of the
stability of the great but stricken market, the banks
treated with leniency. On October 17, most of the
banks resumed payment. For several months there-
after, through the combination of circumstances created
by the disaster, Chicago's banks had more money than
before the fire, and this in spite of the payment of
Chicago's business indebtedness to the East. On
October 19, the savings banks resumed. While they
had previously resolved to pay in full all depositors
whose claims did not exceed twenty dollars, they now
resolved to pay to small depositors in need of money
a larger amount. In all this period of deadly prostra-
tion and instant and courageous revival, it was the
opinion of the wise and just that the banks of the city
were among its truest and best conservators. A year
after the fire business had been generally resumed, the
banks in operation being twenty national, eight state,
and eighteen savings. Their combined capital and
surplus was $14,570,885, and their combined deposits
were $38,129,134. To these banking facilities should
be added those of several private institutions, and of
an agency of the Bank of Montreal, opportunely
established here a few weeks after the fire.
When the panic of 1873 temporarily paralyzed the
coujitry, the bankers of Chicago were no exception, at
least in the consideration of the policy of the suspen-
sion of currency payments. It was a grave hour, and
there was fear, but there was courage, too, and the
banks of Chicago continued to do business without
demoralizing recourse to the expedients of peril. This
was the comment of a local journal on the attitude of
Chicago's banks during this crisis: "Had there been
any sham about Chicago, the late panic, coming when
it did and how it did, would have ground us to powder.
That it did not, that it has passed, without leaving a
mark of its passage, is a fact which we commend to our
own citizens and those of other cities who need to be
reminded of it."
Apropos to the way in which Chicago banks bore
the test of panic, there is offered in instance the follow-
ing testimony from Andreas' "History of Chicago:"
"The attention of the reader should be directed to the
general solvency of the state banks as evidenced by
the manner in which, as a rule, these weathered the
storm. Among notable illustrations were The Mer-
chants' Loan and Trust Company, which has never
known one hour of financial embarrassment."
UNIVERSITY OF ILLINOIS- URBANA
FIFTY YEARS OF BANKING IN CHICAGO CHGO